By Kara Stevens
Despite old stereotypes, women are prudent with money and the numbers back it up. A recent LendingTree survey found that we are more cautious with spending than men. In fact, 51 percent of men admitted to going into credit card debt due to nonessential expenditures, compared to just 42 percent of women. According to Fidelity Investments’ 2021 Women and Investing Study, women also outperform men in investing — take fewer unnecessary risks, think long-term, and achieve better returns. This is done despite a gender pay gap — a gap that only widens for women of color.
But there is another way for women to protect themselves financially: the tax code. More specifically, leveraging the tax code to create a tax strategy that seamlessly integrates into their long-term financial plan to maximize returns, minimize unnecessary tax burdens, and protect assets. This shift requires women to stop seeing taxes as a once-a-year chore and start treating them as a series of strategic moves to secure, protect, and grow wealth over time.
Women, however, cannot afford to be naive along the way; we’re navigating a rigged tax system. While appearing neutral, it consistently favors high-income, high-wealth households at the expense of women and low- and moderate-income families. As the co-authors of A Tax Code for Us, a report by the National Women’s Law Center, explain:
Nowhere does the tax code explicitly state that particular tax provisions are targeted to predominantly benefit households with high incomes and high wealth or to disproportionately exclude low- and moderate-income families. But in practice, the federal tax code consistently fails to advance policy goals aligned with the needs and preferences of the most marginalized people in our society. This has disproportionate consequences for low-income households, women, and people of color.
With systemic bias baked into the U.S. tax code, women need to master the basics first, starting with tax-advantaged accounts, key deductions, and women-friendly tax credits.
How Women Can Maximize Tax-Advantage Accounts…
Women live longer on average than men, which makes retirement savings a top financial priority. One of the simplest, yet most effective, tax strategies is to contribute to tax-advantaged accounts like 401(k)s and Individual Retirement Accounts (IRAs). Contributions to Traditional 401(k)s and IRAs are deducted from taxable income, lowering an individual’s overall tax bill and allowing investments to grow tax-deferred until retirement. In contrast, contributions to Roth 401(k)s and Roth IRAs are made with after-tax dollars, but the money grows tax-free, ensuring that women keep more of their investment earnings in the future.
Why We Save Less & What You Need To Know
IRAs and 401k offer tax benefits that allow women to keep more of their earnings and build long-term wealth. However, many of these accounts assume steady, uninterrupted careers. Women, who are more likely to take career breaks for childcare or caregiving, often lose out on years of tax-advantaged savings. And for women of color, it’s worse. Black women and Latinas, who face lower wages and less employer-sponsored benefits, often contribute less, widening long-term financial disparities.
Women who opt out of the workforce face similar concerns. “If a woman is a non-working spouse, she might think she doesn’t really have a lot of options for retirement saving. She can contribute, but it will be based on her spouse’s earned income,” says Janet Berry-Johnson, CPA and Founder of Firefly Financial Organizing.
Intimate Partner Violence Relief
A 2024 exception provides financial relief for individuals experiencing intimate partner violence. “If you are a victim of domestic violence, you can take up to $10,000 from a retirement account and while it is taxable income, you’re not gonna pay that 10 percent early withdrawal penalty,” says Berry-Johnson.
Student Loan Debt Vs. Retirement Savings
For women overwhelmed with so much student loan debt they’re unable to plan for the future, there is relief: as of 2024, student loan payments are eligible for an employer match. “Employers have to amend their plan to offer that option; it’s a good idea to talk to your benefits or HR department to see if that’s an option and encourage them to amend their plan if they aren’t, or haven’t already,” continues Berry-Johnson.
HSAs & FSAs Offset the Higher Cost of Living in Retirement
Beyond retirement accounts, Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) offer significant tax advantages — especially for women, who often face higher lifetime healthcare costs. “Having an HSA is a game changer; it’s tax-free dollars that you can use to purchase pads, tampons, and other reproductive products until you reach retirement age, which is 59 1/2,” says Kerrina O’Connor, founder and CEO of KAKE Financial. “After retirement age, HSAs can also be a valuable tool for planning, as you can use the funds to pay for Medicare premiums and other qualified medical expenses.”
FSAs are also effective when paying for qualified medical expenses, but they come with a drawback. “Unlike HSAs, FSAs have a ‘use it or lose it’ rule and must be spent by the end of the plan year; otherwise, any unspent amounts are forfeited to the employer,” says O’Connor.
529 Education Plans Offer Flexible Savings Options for Women and Children
Women can also use 529 education plans to fund their children’s education as well as their own. “If continuing education or funding a child’s college is a priority, a 529 plan allows tax-free growth and withdrawals for education expenses,” says O’Connor. “The benefit is that contributions are made pre-tax, and the funds can be used to pay for student loans, children’s education, or even your own educational expenses.”
In 2024, 529 plans now offer an additional advantage: the ability to roll over unused funds into a Roth IRA. This change provides more flexibility for account holders who may have excess savings in a 529 plan. “Previously, if you had extra money in a 529 plan, your options were limited; you could transfer it to another child, use it yourself, or withdraw it and pay taxes on it,” explains Berry-Johnson. “Now, you can roll those funds into a Roth IRA, as long as it remains under the same beneficiary’s name. For example, if you have a 529 plan for your child, you can roll it into their Roth IRA, but not your own.”
Key Deductions and Credits Women Should Claim
While tax-advantaged accounts help women lower taxable income and grow wealth over time, deductions and credits offer immediate tax relief — reducing what you owe and, in some cases, even increasing your refund:
| Tax Benefit | Description |
| Childcare and Dependent Care Credit | Offsets child care or eldercare costs, providing relief for working parents and caregivers. |
| Education Credits (Lifetime Learning Credit, American Opportunity Credit) | Helps lower education costs for women pursuing degrees or career training. |
| Business Deductions for Entrepreneurs | Covers home office expenses, travel, and other business-related costs to reduce taxable income. Entrepreneurial parents can put their children on payroll for age-appropriate work. In 2025, kids can earn up to $15,000 tax-free, while parents benefit from a business deduction. Paying them a salary also makes them eligible for a Roth IRA, where up to $7,000 per year can grow tax-free, helping them save for homeownership, college, or retirement. |
| Student Loan Interest Deduction | Allows you to deduct up to $2,500 in student loan interest per year. |
| Gambling Losses Deduction | You can write off losses up to the amount of your winnings. |
| Employer Student Loan Assistance | Some companies now offer up to $5,250 annually in tax-free student loan repayment benefits. |
| The Child Tax Credit (CTC) | Temporarily expanded in 2021, increasing to $3,000 per child ($3,600 for children under 6) and making it fully refundable. However, this expansion expired, and the credit reverted to $2,000 per child in 2022, with fewer families eligible for the full amount. The current credit still provides support but is not as impactful, highlighting the need for continued advocacy for permanent relief. |
| The Earned Income Tax Credit (EITC) | A crucial benefit for low- and moderate-income families. However, no federal tax credit exists for family caregivers, despite women — especially women of color — overwhelmingly taking on unpaid caregiving roles. Some states have introduced caregiver tax credits, but there is no nationwide policy to support those who sacrifice time and income to care for loved ones. Information in this table is compiled from interviews with Kerrina O’Connor, Janet Berry-Johnson, and Victoria Stanton, as well as data from the Internal Revenue Service at IRS.gov. |
Tax Codes to Watch: The Marriage Penalty & Filing Pitfalls
When building a tax strategy that accounts for gender and financial inequities, it’s also critical to know which tax codes can work against you based on your marital status, and which require careful navigation.
Filing Status Mistakes Can Be Costly
Selecting the wrong filing status, which determines your tax rate and eligibility for deductions and credits based on your marital and household situation, can mean missing out on key tax benefits. “Many women mistakenly file as ‘single’ while claiming dependents, but ‘head of household’ offers better tax breaks and a higher standard deduction,” says Victoria Stanton, founder of Breakaway Bookkeeping and Accounting.
Marriage Can Incur Tax Penalties
Even though society pushes marriage as a life goal for women, marriage doesn’t always bring tax benefits. “A marriage penalty kicks in when a couple filing jointly pays more in taxes than they would if filing separately as single individuals,” explains Berry-Johnson. This typically happens when one spouse earns significantly more than the other. Unfortunately, filing separately isn’t a workaround: “Married filing separately actually penalizes you further by disqualifying you from key deductions and credits,” she adds. While unavoidable, being aware of this penalty can help couples plan ahead.
Blended Families & Child Support Risks
Blended families face additional tax challenges, particularly when one partner has outstanding child support debts. “If a partner owes child support and is expecting a tax refund, that refund will be redirected to pay off the debt,” warns O’Connor. This means the other spouse could lose out on their share of the refund if they file jointly.
Cohabitation: The Best of Both Worlds?
For unmarried couples, tax filing requires a different approach. “Unmarried couples can’t file jointly,” notes Berry-Johnson, “but if one partner has a dependent living with them full time, they may qualify for the ‘head of household status,’ which comes with significant tax advantages.”
Divorce & Alimony: Good News for the Recipient
If you’re divorcing, it’s important to know that tax laws have shifted. “As of 2019, alimony is no longer taxable,” says Berry-Johnson. “Previously, recipients had to pay taxes on alimony income, while payers could deduct it. That’s no longer an option.” This change significantly affects divorce settlements and financial planning.
Your “Who” is as Important as Your “Why”
Finding a tax professional who truly understands tax law — and who aligns with your financial vision — is one of the oft unspoken elements of a powerful tax strategy. When selecting a tax professional, look for preparers who are aware of the unique challenges women face, such as the impact of career breaks and the nuances of the marriage penalty.
And talk to them often.“Especially if you’re making six figures, try and tap in with someone midyear,” says Stanton. “They can guide you on the best time to make large purchases, career changes, or even investments so they can be incorporated into your overall tax plan.”
Additionally, check their credentials. “There are storefront shops that pop up during tax season and then disappear throughout the rest of the year,” warns Berry-Johnson. “Some of them really don’t have to have any sort of experience or education or licensure to file taxes for people.” Instead, consider a CPA or an enrolled agent. “A CPA basically means they’ve gone through three levels of education experience, an exam, and the CPA license; it’s a very trustworthy designation, but it’s not always necessary just to have your tax prepared,” says Berry-Johnson. An enrolled agent (EA) is a designation or license specifically from the IRS. “EAs tend to focus strictly on taxes. They can be very helpful whether you’re getting audited or responding to IRS notices,” continues Berry-Johnson.
And finally, as women who want a more equitable world, speak truth to power. “We can advocate for tax equity on a daily basis,” says O’Connor. “Go to sites like House.gov or Senate.gov. to see what bills are coming and what’s passing.” O’Connor also suggests knowing who your state representative is and reaching out to them regularly to find out how they’re working on your behalf, “Don’t be afraid to pick up the phone or email your representatives if they don’t uphold their campaign promises.”
The tax code wasn’t designed with women in mind, but that won’t stop us from learning, leveraging it to benefit our families and ourselves, or pushing Congress for better tax policies.
Kara Stevens is founder of The Frugal Feminista. She pays her taxes on time with the help of an EA and envisions a world where women are happy, wealthy, and brave. You can follow her on Instagram or connect on LinkedIn.